A (0:00)

Sam. Saint Gonna change one. Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, our jobs, our incomes, our debts, those of our children, and what the economy is looking like in the months and years ahead, what the new president will have to face, and what we who live with all of that will have to face. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and I currently teach at the New School University in New York City. Well, before we jump in, I want to ask you something, which is a topic I bring up from time to time. It is a request, an urgent request, that you partner with this program, that you work with us to get the message that we present and every week about how this capitalist system works or doesn't, that you partner with us in order to get the message out, to get more people aware of what's really going on. Because, frankly, the mainstream media do a very poor job and the schools haven't done much better. The level of economic understanding in this country is sad. It's not the fault of the people who don't understand. It's the fault of a system which not only isn't working real well, but is even more hesitant to explain itself under these circumstances than it has been in the past. And it wasn't very good in the past either. So we work very hard to bring issues to the fore, to explain what's going on in the economy. And in order for us to succeed in affecting and shaping and influencing the discussions and the decisions being made in this country, we, we need your partnership, make use of this program. Share it with others. This program is archived at our website. Democracyatwork.info that's one word. Democracyatwork.inf o share this program with others. Download it on itunes and any other mechanisms where you can listen to it at your leisure or share it with other people who can listen to it when they have the time. Help us if you can, make use of our websites to share the work that we do. That's why we do it. All right, let me begin with, in a way, what is the most important in Europe on Thursday of this past week, the European Central Bank. That's the European equivalent of the Federal Reserve System. In the United States, the European Central bank once again took actions that speak much louder than words. The actions are to offset the terrible, dangerous, declining economic conditions of the continent of Europe. That's a continent that has more people than the United States. That is a larger economy than that of the United States, if taken together, Germany is the most powerful unit within it. But if you add Germany to England and France and Italy and Spain and the other large economies, we're talking about a shaper of the world economy. What did the European Central bank do? Well, it is doing more of what the Federal Reserve did in previous years. It is pumping up the money supply. It is lowering its interest rates. It is trying desperately to get more economic activity going in Europe so that the decline of the economy and the political fallout from all of that is somehow halted. They are nothing short of desperate. And the impact of what the Europeans are doing will be felt in China and in the United States, the other Poles, if you like, of the dominant players in the world economy. For the United States, it's going to hurt our economy. Why? Because when the Europeans lower their interest rates, and I'm going to talk to you about it in a moment, it means that the European currency loses its value relative to the US Dollar. This will become even more exaggerated if the Federal Reserve carries through with its threat to raise interest rates, because that will make the dollar a currency in which people want to hold their wealth versus the euro, a currency people want to get out of because it's declining in value. So the euro will become cheaper, the dollar will become more expensive in terms of other currencies, and that'll make it cheaper for Americans to buy European goods paid for in euros, and harder for Europeans to buy American goods because the dollar is more expensive for them. That will boost the exports of Europe and diminish the exports of both of the United States and of China, where the same mechanism works. China's already slowing down and that's impacting on the world economy because the United States can't buy the way it used to. Now the United States economy is going to be hurt. We're beginning to see the competitive devaluation of currencies as the different players try to improve their own situation in ways that damage those of others who will then be inclined to retaliate. And you can see how this is another manifestations of a global capitalist system that is unable to solve its problems. More and more serious problems, less and less capacity to cope. And that's a reason to question this system, if you needed one. One of the things the European Central bank has done is to lower some of its interest rates, not all to below zero. That introduces something called a negative interest rate. And this is being done more and more, not only in Europe, it's done in Japan. It's even done in some cases here in the United States, more of that is coming. What does it mean? It means that if you lend money to something, any entity that pays a negative interest rate, not only will you get no interest for that loan, let's say it's a loan for a year of 100 of anything. You will not even get back the hundred at the end of the year. You will get no interest, but you'll actually have some negative interest taken out of your principal. So if you lend 100 at the end of the year, you'll get back less than 100, say 99 or something like that. That's what negative interest means. Why did the European Central bank introduce, or worsen, in fact, is what it did already negative interest rates to make them more negative? Because they're desperate. Their hope is to say to people who have money to lend, don't lend it to the central bank, because you're not even going to get the money back. You're not going to get any interest, you're going to be penalized. And the goal is to induce the banks to lend money to people who will buy things, to companies who will grow in order that jobs be created, in order that business be boosted, in order that the economy revives. They have to do these extreme actions because all of the lowering of interest rates which they've been doing for years, failed to solve the problem. Because all of the extra money they've pumped into the economy over recent years from fail to solve the problem. Did they decide that their strategy having failed, that they need to question the whole system, to take a new direction? Not at all. These are people who are convinced that whatever they did was right. They just didn't do enough of it. So they're now going to do more of it and let the chips fall where they may. It is a capitalist system that doesn't work even on its own terms, even for its major boosters. It's not working. And they're having to do more and more extreme actions with more and more dangerous consequences for struggles amongst them, which a system in trouble cannot afford. Let me turn since I dealt with Europe, to another story from Europe this last week. Very, very important. Hundreds of thousands of students and workers were in the streets in France this last week. Why were they there? They were protesting. Interestingly, they were protesting actions planned by the Socialist government. The Socialist Party of France is the government now. They're overwhelmingly dominant. The president of France is. Is a Socialist Party leader and they control the majority in the parliament in France. So the plan of the socialist government is to reduce the protection that exists in French law for job security. In the law in France, if you hire a worker for a regular, full time, long term job commitment, you cannot fire that worker in anything like the easy, casual manner that exists in the United States and indeed in many other countries. You have to show cause. There are special courts and laws and procedures that protect workers from being fired simply because the employer doesn't like them, or the employer thinks it's more advantageous and more profitable to hire someone else or to make one person do two people's jobs, etc. Over long years of struggle, the French labor movement and the old socialist, communist and other left wing parties won those laws in the French government, in the French legal system for protection. Now the Socialist government, yes, the Socialist government is responding to lots of pressure from business and employer groups to relax those protections. The employer groups complain it's hard to fire workers. It's expensive to go into court to justify. When we do fire workers and the judges don't always side with us sometimes, can you imagine, the judges say that the workers were fired unfairly, that the workers were punished for problems in the company that were none of their doing. And then the judges forbid the. And then the judges can sometimes fine the employer when the firing was unjustified, hurtful to the employee and so on. They don't like it. Well, they couldn't go ahead and say, especially if they're socialists and many businesses in France find the Socialist Party perfectly congenial. They couldn't go ahead and say, well, we want to be freer to fireworkers. That wouldn't sound real good. So they don't do that. Here's what they say instead. And this is exactly as genuine as a four dollar bill. They argue, look, 10% of French's workforce is unemployed, by the way. That's true. And if we didn't have to worry about hiring workers that we would have expensive litigation when we fire them. Well, we might be quite willing to hire some of those unemployed. That's right. The employers want us to believe that they're looking to relax protections of workers because of their deep concern about the unemployed. Something that the employer class in all countries is famous for, don't you think? Here's the second argument. They lots of workers in France, as in many European countries and indeed around the world, have recently changed their name. They used to be called the Proletariat. They now call themselves the Precariat. Why? Because their jobs are precarious. Their jobs are not Secure. Their jobs are flaky, they don't get very many hours. The employer changes the hours, fires them at will, who tries to rehire them a week, a month later, jobs have become unsure. Things that has happened everywhere. The French are in no way particular about that. But no matter. The French employers use the following. With 10% of the people unemployed, and with a growing number of French workers suffering job insecurity, precarious work. If only you allow us to reduce the protections of the major part of the working class, the people with regular, long term, full time jobswell, then we would be in a position to give better terms to the short term people than we now do. We could make them long term because we wouldn't have to worry about the protections. This is exactly what it sounds an effort by employers to get a better deal to be able to fire workers, not to have workers protected in their job security. The argument that we should take seriously, that the employers are worried about unemployed folks or worried about the sufferings of people whose jobs are precarious is not worth taking cognizance of. But let me anyway. This is happening everywhere. The French employers don't want their people to know that precarious work is on the march. In the United States, in great Great Britain, in Spain, in Italy, all across the developed world, Japan too, which used to give quite a good job security for its people. Precarious work is the way that the employer class is making more money by not having to give to its workers what those workers won in the past. And the French workers are to be commended. They're to be commended for fighting back, for not taking it, for not slinking with their heads down into a corner, figuring out only as individuals how they're going to cope with a less secure job. The French, in their revolutionary tradition, understand that these are political issues, they are social issues and they demand a social response. That's why. Led, by the way, by students, but with many, many unions and working people joining them, they're in the streets all over France, massively, hundreds of thousands demanding that worker protections be maintained. Now, my last point, the crocodile tears shed by the employer class who are only looking for their own profits, as they always have, have a simple if you were genuinely concerned about precarious jobs of people who are suffering because their jobs are part time, half time, easily changed, no set schedule, all of that. And if you were genuinely concerned about the 10% of the French working labor force that's unemployed, you would support programs you have never massive jobs programs, secure government jobs, doing all kinds of things that the French society needs. That way you would solve the unemployment problem and that way you'd solve the insecure job precariate problem. You never support those things. The only way you can figure out to help the unemployed is by taking away protections from the employed. Who do you think you're fooling? And the American people face exactly the same process. The difference is our unions and our students are not yet leading us into the streets. But if they want to change the situation, they will have to do that sooner rather than later. Okay, let me take another story. This one is about airlines in the United States and it is so outrageous I have to talk to you about it. It turns out that two members of the United States Congress, Edward Markey, Democrat of Massachusetts, and Richard Blumenthal, Senator from Connecticut, both Democrats, are terribly upset about airline fees. They point out the practice these days, for example, of charging to hang up your coat, of charging huge fees for for your baggage that used to be carried free, of charging $200 for you to change your ticket from today to tomorrow, even if the price of the ticket was less than $200. And even if it were more than that, there's no justification in the minds of Congressmen Markey and, excuse me, of Senators Markey and Blumenthal from New England. So they've introduced a bill that would block the airlines from charging outrageous fees, particularly at a time when airline companies are drawing in record profits. So clearly they don't need it. Well, there's no chance in a story in the Bloomberg news of March 9, there's no chance for this bill introduced in the Senate to get anywhere. And why is that? Well, because no one in the House is interested in it. The Republicans control the House. And in particular, and this is why this story is so funny, Representative Bill Shuster, a Republican from Pennsylvania, is the chairman of the Transportation Committee that would have to take up this bill in the House and he's not going to do it, according to Bloomberg. And here's a little story Bloomberg dug up that I want to share with you. The Transportation Committee in the House of representatives, led by Mr. Schuster, will not look at this bill to limit the fees taken from us by airline industries if we want to change our ticket or have a bag to carry. And here's a little detail from Bloomberg. Turns out a long weekend a few days back in Miami beach were held by Mr. Schuster, the Republican head of the Transportation Committee, and Nicholas Calio, who's he? He's the president of Airlines for America. Lovely name that's the lobbying group for the airplane companies. They socialized during a long weekend, says the Bloomberg News in Miami beach, together with Shuster's girlfriend, one Shelley Rubino. And Bloomberg tells us who Shelley Rubino is the girlfriend of the Republican congressman who's going to prevent us from from having relief on our fees. She is the vice president of the airline lobbying group, Airlines for America. That's right. The congressman who's putting the kibosh on relief for these fees has a girlfriend who works for the lobbying company helping the airlines. You couldn't make this stuff up. To be more obvious. As an example of what it is, let me conclude today with responding to a question and a good one sent in by a listener. This has to do with the revival of a false but widely distributed effort to explain the economic Crisis Starting in 2008, the collapse of what were called subprime mortgages, which, when people who could not pay their mortgage fees defaulted and the system of finance built up on those debts, collapsed with it. That brought the crash of 2008 and the economic recession we've been living in, most of us, ever since. This disastrous performance of capitalism, by the way, continued by the very desperate actions of the European Central bank with which today's program began. This has brought a problem to people who want somehow to defend the capitalist system. If these people are honest, and of course many of them are, they know that the economic conditions for most Americans and most Europeans and most Japanese has been awful for years. They're not willing to deny that. There are, of course, people who pretend it isn't happening. But I'm not talking about those. I'm talking about those who. Who at least recognize that capitalism as a system is performing very badly. But now, wait a minute. These people recognize that the conditions are bad, but they don't like it. When I say it's the problem of the capitalist system, they look for a scapegoat, something other than the capitalist system that they could blame for it. Many of these people give themselves the label libertarian. Here's how their reasoning the reason that the system collapsed is because large numbers of people who held these things called subprime mortgages, who had bought their homes with borrowed money but were now unable to pay those loans back. These people shouldn't, they say, and wouldn't, they say, have gotten those loans and therefore would never have defaulted if it weren't for. Here comes the bad guy, the government. And they point to something called the Community Reinvestment Act. This was an act originally passed in 1977amended and added to of the years afterwards, culminating in the 1999 version. Basically, this act said that banks should not redline neighborhoods. This was an old practice of banks where they decided that there would be certain neighborhoods in every city where they wouldn't lend any money. These typically were poor neighborhoods, African American neighborhoods, Hispanic American neighborhoods. The banks were perfectly happy to take the deposits of businesses and people in those neighborhoods, but they wouldn't want to lend to them. They said, not that they admitted to racism or discrimination, but because it wasn't safe to make the loans there. What this meant was that poor neighborhoods were doubly burdened. They were poor to begin with, their wages and salaries were low, but they couldn't get credit from banks to improve their homes, expand their homes, buy their homes. And so of course it made matters worse and these bills were passed and here's what they said to banks. We encourage you, we give you incentives, we give you very mild possibilities of some punishment, no real penalties of any kind. If you just would please lend a little more. Stop redlining these neighborhoods. It encouraged, that's really the word, it encouraged banks to lend more into the neighborhoods that they had redlined and discriminated against. This, the libertarians and those who want to defend capitalism no matter how badly it performs, they've seized on this. See, they say the only reason we've had an economic crisis is that the government came in and made the banks lend money to people who couldn't pay it back. That is stone cold false. This is not a matter of interpretation, which we can admit can be varied from time to time. But this is not, this is not credible. And this is really the kind of stretch that shows people in a desperate bind they cannot face that capitalism doesn't work. So they've come up with a scapegoat, the government. Here's why it's wrong. A most subprime mortgages were made by mortgage lending companies that are not covered by this law. The law affects only banks. And most of this dangerous lending wasn't done directly by banks, number one. Number two, the law specifically exempted banks from having to make any law that make any loan. Excuse me, that wasn't prudent, that didn't meet the normal standards. That's why it was a very namby pamby law to begin with. It didn't really solve the problem because it provided no penalties. It allowed this reasonable lending rules to apply and it didn't apply to the companies doing most of the shady laws lending. So it's a phony excuse. What's the lesson to be drawn here? Capitalism isn't working. And to say so, which we do on this program all the time, is the taboo thing, the thing that everybody who wants to defend capitalism is working so hard to avoid. That's why it's clever for libertarians to blame the government. After all, libertarians like to blame the government for virtually everything that's wrong. So why not the economic problems with we have as well? What's the alternative to this perspective? I'm not interested in a debate whether it's the government made mistakes or the private big corporations. For me, it's crystal clear that the big corporations call the tune and the politicians ask how high they should jump when the corporations want them to, or just exactly what steps of a dance is necessary to go with the tune that is played by the big corporations. But whether you agree with me or not, it's clear that in our system, big business and big government have been working hand in glove. If you look at who the biggest politicians are, they come from the world of business. If you look at where the politicians go when their terms are over, it's the world of big business. I mean, how many pieces of evidence do you need to understand Capitalism is a system that is political and economic. That's why we call the science that we pursue the political economy, because it recognizes that picking the one or the other misunderstands how closely a government run by big business works with that big business. We'll come back to this later in the program, but it's important to understand that and not fall for desperate arguments trying to suggest it's some government policy just so you can hold on to the idea of that the government is the big enemy, that everybody should focus on leaving the private capitalists to walk away and laugh all the way to their big bank accounts. We've come to the end of the first half of today's economic update. I want to thank you for being with me. I want to remind you to make use of our websites, rdwolf.com with two Fs and democracy at work, they are full of more material, substantially expanding on what we do on this program. In any case, please stay with us. We will be back very, very shortly after a brief, brief interlude for the second half of today's economic update. Put on your red shoes and dance the blue dance Dance to the song playing on the radio let's wait While color lights up your face let's wait Sway through the crowd To a lifted space. Welcome back, welcome, friends, to the second half of today's economic update. The second half, as you know, those of you that listen regularly, is devoted to a major issue or several that requires more time to explain than the shorter topics that comprise the first half of each show. So I want to start today's major discussion with a little bit of an economics lesson. And I chose this lesson because many of you have emailed me. And I want to remind you that our websites, Both of them rdwolff with two f's.com and democracyatwork.info both of those websites provide you with ways to communicate to us, to ask questions, to make comments, to offer criticisms and suggestions. We read every single one. So please make use of them, keep your emails flowing. They help us shape a program which we want to be as useful and responsive to you as we know how to make them. So here goes our little economic lesson for today. How do you understand production in a simple way that gets at the core of, of how capitalism as a system works? Well, let's do it. It isn't very complicated and it can be presented in a straightforward way. And that's what I'm going to try to do. Every production process, whether it's to produce a hamburger or to produce a software program or to produce a haircut at the barbershop, whatever involves the use of two things. Inputs, materials. You need either that are raw materials for making it. For example, you need meat if you're going to be producing a hamburger. You need lumber if you're going to be producing chairs. You need electricity if you're going to be making software programs, and so on. So you need materials to work on. You need tools and equipment to work with a desk for a computer, a machine of one kind or another. You need all of the raw materials, tools and equipment that go into it. But you also need human labor, that is, you need a human being, a man, a woman, one, many to transform the raw materials, using the tools and equipment to produce the final product, whether it's a good or a service. So now let's look at the value relationship. How do you account for all of this? I'm going to make it really simple. Let's assume that you're producing something, let's call it a software program. And you need $100 worth of material inputs, you need a computer. Now, of course, the computer is worth much more than a hundred dollars, but for each piece of software you produce with that computer, you're only using up a little portion of that computer. It's going to Last for a few years. And you have to kind of figure out for each piece of output you produce using the computer, what little portion of the computer is used up. And you're going to use up some paper and some pencils and some desks. You're going to have to heat the room if it's in a cold climate where you do this work. Suppose all of that is a hundred dollars worth of stuff you need to produce a software program, okay, $100. So the price of the software program has to have in it at least $100 to repay anyone who produces this all the money that that producer laid out for the tools, equipment and raw materials that go into producing a software product. But that's not all that the price has to cover because you have to pay the worker. You have to pay the worker because human labor is needed so that the heated room and the paper and the pencil and the computer can be made to produce the final product, in this case a software program. So the price of the output has to have. Let's say the worker charges $100 for his or her labor, okay? Now the output price has to have in it $200 worth of price. 100 to replace the tools, equipment and raw materials used up in producing it. And the other one, the hundred dollars that you had to pay the worker. Is the worker therefore worth $100? And the answer is no. The worker has to be worth more than that. What do I mean? The worker, by his or her labor has to make the hundred dollars of tools, equipment and raw material used up worth more than $200. Why? Because if it's worth, say, 250, because the worker has made it valuable by applying his or her brains and muscle to transform the tools and raw mater into the final product, then we have a capitalist system. Why? Because if the software is sold for $250, the capitalist takes $100 to replace the tools, equipment and raw materials, used up another hundred dollars to pay the worker the wage that has to be paid if the worker's going to do the work. And the remaining 50 bucks is the capitalists. It's value added by the worker, but not paid to the worker. It's what the worker adds when he or she works. That's why the worker is adding 150 worth of value. Because otherwise the product wouldn't be worth 250, would it? So here we have capitalism. The capitalist buys tools, equipment and raw materials. For 100, he buys the time and energy of the worker. For another hundred, he sells the output at 250 and he keeps the 50 out of it for himself. That's what profits are. It's what capitalists get by having production occur under their control. Profit is produced by workers transforming raw materials, using tools and equipment to produce an output, and selling the output for more money than it takes to have the work done. Let me drive the point home. If for a moment you imagine that the capitalist isn't there, well, then the workers could either sell the product at 200, paying off the cost of producing it and paying themselves a wage and making products much cheaper for everybody else, including those workers, or the workers could continue to sell the product at 250. But now with the new reality that instead of getting just the hundred as a wage, the workers say if they were running a worker cooperative, would get the other 50 too. Rather than the capitalist, might the workers be able to run the business themselves? Of course they could. Might the workers manage themselves? They might very well do it better than an employer, since by being self managers they better understand, they probably better respect. They're less likely to cheat because they are now cheating themselves if they don't work. You can see that capitalism's very way of organizing production creates on the part of the capitalist a real vulnerability once you see how the system works. Because once production is underway, who needs the capitalist? If the question in your mind is, doesn't someone need to supervise all of that? Yes, but the supervisor is a worker and gets paid the wage. That's part of that hundred for the worker that has to be paid. Not all workers are supervised. Some are supervisors. And in a way, I believe you all know what I'm talking about. Even if the lesson isn't hundred percent clear, and even if you're not used to this kind of reasoning, here's how you know. You know that the people who own shares of stock in our society lead an extraordinary life. If you own a share of stock in a company of that pays a dividend, here's what happens. Four times a year you find in your mailbox an envelope. You tear open the envelope and in it you find what's called a dividend check. That is money sent by the company, a share of its profits. The $50 in my example from a minute ago. It's a share of the profits that the company sends to because you're an owner of shares. If you own a million shares, this can be half a million dollars. A million dollars, five million dollars. Depends on the size of the dividend. Most of the rich people in the United States are rich because they own shares of stock and get these quarterly dividend checks. Do you have to work on the company to get a dividend check? No. Do you have to contribute to what the company produces in any way? No. You just have to own shares of the company. You could have stolen them. You could have inherited them from your grandmother. You could have gotten them in a deal when you sold your company to another company and they gave you shares. All that matters is that you own them. And once you own them, a portion of the profits are given to you. You can go out and use that money to buy goods and services. Goods and services toward which you made no effort in production at all. That's what is done with profits in a capitalist system. The morality, the ethics, the reasonableness of it, I leave to you. But it is crystal clear that when workers permit capitalists to sell the products of their labor for more money than it costs to replace the tools and equipment used up and to pay for the labor needed to produce it, somebody is getting more than they need to, and somebody is not getting the full fruit of what they're doing. I want to turn now to something you've all asked me to talk about, and I accede to your request, and that is a little bit about the economics of the political scene here in the United States. Something is happening to both the Republican party and the Democratic Party that neither party foresaw. And that reflects a fundamental breaking down of American capitalism. And therefore it is of enormous importance, not just to the United States and its people, but to the whole world, given the importance of the American economy within the world economy. Let me explain. Capitalism, as listeners to this program well know, is a system that brings a great deal of wealth to a relatively tiny part of the population. That's why we talk about the 1% versus the 99%. It is crystal clear that capitalism creates a class of people who have wild amounts of money. They are billionaires of the sort we now read about in the newspapers every day since they're running for president or considering running for president, etc. When you have a society in which a relatively small number of people have inordinate wealth, you create a problem. Let me give you an example. The top 3,000 corporations in the United States do the bulk of the business of American capitalism. They typically have a board of directors. Each of these 3,000 corporations that has on it, let's say, roughly 20 people, which would be an average. Okay, so you do the math. 20 people times 3,000 corporations is 60,000 people. I'm gonna ignore interlocking directorates. That's when one person sits on multiple boards. Even though that happens, I'm gonna make simple assumption that if you add a bunch of other companies that are not in the top 3,000, we can talk if we want to. About 100,000 people that sit at the top of the capitalist system of the United States. 100,000 people. These are the ones with the big shares owners owning big blocks of shares. These are the ones who are CEOs and earning the big bucks, etc. 100,000 people. The population of the United States is 330 million. So you're talking about 0.00 something percent of the population. You're not talking about a large number. And yet we live in a society that is committed to universal suffrage. Everybody has a vote. Everybody. Every adult in the 330 million, with a few exceptions, is at least eligible to vote. If you haven't been in jail, if you haven't had various other problems, you basically can vote. This creates an unspeakable difficulty for all capitalist systems, and it always has. Because sooner or later, in such a system, the fact that a tiny percentage have the dominant wealth and the dominant political and economic role in society, while at the same time the mass of people who are excluded from all that wealth, who are excluded from all that the wealth makes possible, they are going to say to themselves, scratching their heads, wait a minute. We're the majority and we're in a universal suffrage system where being the majority, we cast the majority of votes. So we could, here we go now. Use the political system where we have the votes to undo, to reverse, to correct the inequality that our capitalist economic system imposes on us. We could set up, for example, a tax structure that taxes away from the super rich and distributes to everybody else, so that politically, by passing the right laws, we can reverse, we can provide a balance to the inequality created by capitalism. We can pass rules, laws, regulations that distribute wealth and income differently, that provide services to people who can't afford it to match the services that rich people can always buy for themselves. So on and on and on. So rich people have understood this too. That their unique wealth, their enormous wealth, the enormous wealth that separates them from average citizens in every capitalist country is vulnerable. It's politically vulnerable. What do I mean? They have to worry sooner or later that the mass of people will figure out. We'll have leaders that explain to them, have teachers that bring home to them, have friends and neighbors who chat over a picnic with them. Look, we don't have to live in economic difficulty. We don't have to worry that the only way to send our kid to school is to take out tens of thousands of dollars of debt that hang over their heads for the rest of their lives. We don't have to worry that there isn't a paycheck at the end of the week. We don't have to worry about the food that we provide for our children. We can use our political power in a system of universal suffrage. One person, one vote, to fix and correct the inequality produced by capitalism that's a threat to the capitalists. What have they done? Two things. The preferred step that they've taken is to build an alliance between the top capitalists and political parties. And here's the deal. The top capitalists will give to the political parties and to their leading candidates huge amounts of money to be candidates to run around the country preening themselves, giving speeches, doing interviews on the media, handing out goodies to lower levels of the political party, all the way from president down to local dog catcher and everyone in between. They will provide millions, tens of millions, hundreds of millions, and if you follow the American election scene these days, billions with a B to political parties. But the deal isn't one way. It isn't just the richest capitalists, the big corporations, the, the boards of directors, the CEOs who give money to the party. They want something back. What is it? The job of the party is to collect people, large numbers of people, and to have those people believe, as part of being a Republican or part of being a Democrat, that they should support, they should encourage, they should believe in capitalism. That's why they're getting the money. How do you do that? You make an alliance. You basically go like, I'm going to use one example from the Republican Party and one example from the Democratic Party. Since nothing I'm saying here should be understood as endorsing one or the other candidate party. That's not what I'm doing. Let's start with the Republican example. The Republican Party has done its job well. It has reached deeply into the religious communities of the United States. Protestant, Catholic, Jewish, and so on. It has said to them, we will champion you. Do you have an important issue for you as a religious group? Would you like there to be prayer in the schools? Would you like to ban abortion? Would you like to oppose gay marriage? Whatever it happens to be at the moment, it really doesn't matter. The political party in this case, the Republicans will champion that at least. They'll give a lot of lip service to that. In exchange, they want the religious community to be in favor of free enterprise, in favor of private enterprise, in favor of the government not hampering businesses in the decisions they make. You get the picture. Here's the the party will support the religious community if the religious community supports big business. Big business provides the money. The mass religious community provides the votes, and the political party organizes all of this. I could, if I had more time, I would talk to you about how the Republican Party does that with gun owners. The Republican Party does that with people for whom patriotism and the American military are wonderful institutions. And the Democratic Party does exactly the same, only with different groups. It goes after labor unions, says, look, you support the private enterprise system even though you fight with them every day on the job, but you support the private enterprise system and the party will support you. It will get laws that give you a decent wage, that give you a minimum wage, that maybe help you with your tax. We'll help you, but you got to support capitalism. And then we will be the Democratic Party that takes the money from big business to run our political campaigns, just like the Republicans. And we make a community support capitalism. In the language that makes this simple, the capitalists need a mass base to support them. Otherwise, they're too vulnerable in the capitalist system. They're too small. They've created enemies, and the enemies are the majority. And the political party is supposed to solve that problem, create huge communities that will support capitalism in exchange for having a party that uses the government to give them something for their community. When it works, as it has for most of the last century, it keeps capitalism in the driving seat. But sometimes things go wrong. Sometimes, for example, a community decides they're not getting a fair shake in this deal. There are many in the evangelical community who think the Republicans have betrayed them, have not delivered on what it is they care about. Meanwhile, they've been supporting the capitalists, and they're angry, and they're angry at the leadership of the Republican Party. Likewise, in the union movement, there are many who feel the Democratic Party has been much too beholden to its biggest capitalist donors and hasn't give union men and women very much. And then it begins to break down. If you have an economic crisis like we had in 2008, the breakdown is even worse. That's why millions of Republicans are thumbing their nose at the Republican Party. And the form that takes is voting for Mr. Trump. And millions of Democrats are no longer playing the game of the Democratic Party establishment. That establishment has at its top Bill and Hillary Clinton. So since she's running, the way that the mass of Democrats are expressing their disaffection from this arrangement is by voting for Bernie Sanders, Sanders for the Democrats, Trump for the Republicans. But the importance of their campaigns, whether they win or not, is not the issue here. The importance is that millions and millions of Americans are opting out of the deal. And what that does, and here's the important point, is it creates enormous anxiety at the highest levels of the United States. There was a recent meeting within the last couple weeks at Sea Island Resort off of Georgia, the American Enterprise Institute. It was widely covered in the press, leading Republicans terrified about the end of the Republican Party because of Trump. Democrats were there. Arthur Sulzberger, the publisher of the New York Times, was there. They were all trying to figure out, what do we do? Their problem isn't Mr. Trump particularly, or Mr. Sanders for that matter. Their problem is that the parties are not playing the role of collecting everybody into a celebration of capitalism so that they are secure at the top, and they don't know what to do and they don't know how to change this. The news I have for them, as I do for you, is your problem is a system that doesn't work. Your second problem is when your system doesn't work, you can't face that reality because you are too committed to the system. So you got a problem, and you can't face where the solution lies. That makes you desperate. And if you have a sense of that, the political and economic situation in the United States is beginning to look like it's spinning out of control. You're right, it is. These are all signs of a system whose ability to survive, whose institutions that support it are in disarray, are falling apart, are not holding together the way they once did. When Trump keeps defeating all the efforts of the establishment to gather around somebody else to blunt his appeal, to attack him personally, and it doesn't work. They are getting scared. That's why they had that meeting off the coast of Georgia. And when Mrs. Clinton loses the primary to Mr. Sanders in Iowa, in Michigan, my goodness, this is not supposed to happen. A man who uses the name socialist and accepts it is supposed to thereby have committed political suicide. Nothing of the sort. We live in very rapidly changing times and circumstances, and one job of this program is to keep on top of it, as we will try to do. We've come to the end of another program. Please make use of our websites, rdwolff with two f's.com and democracyatwork.info they're there for your use to share what we do on this program. I want to thank truthout.org, that remarkable independent source of news and analysis that is a big partner to us, as I want all of you to be. Thank you for listening, and I look forward to talking with you again next week.